Lifetime Learning & American Opportunity Tax Credit / Form 1098T

This material is provided as a service to State University at Stony Brook students and families to assist them in understanding the new higher education tax credits. The information offered here is not tax advice.

Disclaimer

This material has not been approved by the IRS or the U.S. Treasury and is not an official document. It is offered as a service to the Stony Brook University students and families. This is not an official form nor does it necessarily represent official policy of the State University of New York. This material has not been reviewed or approved by an attorney.

What is Stony Brook's Federal Tax Identification number?

The Federal Tax Identification number is 16-1514621.

What is Form 1098-T?

The University is required to furnish Form 1098-T each January to all students who have incurred qualified tuition and related expenses during the prior year. This information will help alert the student, or the person that claims the student, that there is a possibility of being eligible to claim the American Opportunity Tax Credit or Lifetime Learning Tax Credit. IRS Form 1098-T is informational only.

Box 2 shows the total amounts billed for qualified tuition and related expenses less any reductions in charges. Qualifying expenses at Stony Brook include tuition, college fee, athletic fee, student activity fee, technology fee and course fees. Non qualifying expenses are the transportation, infirmary, insurance, room, apartment, and meal plan fees. (Note that Box 1 is left blank intentionally, as SUNY schools do not report based on payments received but instead report amounts billed).

Box 5 shows the total of all scholarships or grants administered and processed. These amounts include federal and state grants such as Pell, SEOG, TAP as well as tuition waivers and graduate tuition scholarships. The amount of scholarships or grants may reduce the amount of any allowable tuition and fees deduction or education credit you may claim for the year.

Box 8 shows whether the student is considered to be carrying at least one-half the normal full-time workload for a course of study at the university. If the student is at least half-time for at least one academic period beginning during the tax year, then one of the requirements of the American Opportunity Tax Credit is met.

Box 9 shows whether the student is considered to be enrolled exclusively in a program leading to a graduate-level certificate or degree. Students enrolled exclusively in a graduate program may only qualify for the lifetime learning credit.

This tax information about enrollment is being furnished to the Internal Revenue Service. Please be aware, however, that the university is not responsible to determine a student's eligibility or to calculate any education credit that may be claimed.

IRS Publication 970 explains qualifying tuition and fees, and payments. To receive the American Opportunity Tax Credit or Lifetime Learning Credit, you must account for and document the amount you have paid for tuition and expenses on IRS Form 8863 and file it with your yearly federal tax return. You do not file Form 1098-T with your tax return.

The Social Security (SSN) or Individual Taxpayer Identification (ITIN) Number on my Form 1098T is missing or incorrect. What should I do?

Reporting to the IRS requires that we include your taxpayer identification number (SSN or ITIN). It is very important that we have complete and correct information on file.

For students who do not have an SSN or ITIN on file by January 6th, a 1098T may be generated for them with a randomly assigned reporting number in the SSN field. This number is assigned by the vendor that generates our IRS form 1098Ts and is used for form retrieval purposes only. That number IS NOT reported to the IRS.

If a student receives a 1098T with an SSN they do not recognize, they should contact the Office of the Registrar to see if their SSN is on file. If not, they can visit their office with their original signed Social Security card to have this information added to their record. They can then email StudentBilling@stonybrook.edu to request the SSN on their 1098T be updated. However, we cannot update the SSN on their 1098T before this number has been added to their University record.

What is the Lifetime Learning Tax Credit?

The Lifetime Learning Tax Credit is a federal income tax credit that is equivalent to 20% of the first $10,000 paid "out of pocket qualified tuition and related expenses" (see definition), up to a $2,000 maximum within a given tax year, and is nonrefundable (it is subtracted from the taxes you owe; you cannot claim a credit for more than you owe in taxes; you cannot file a tax return solely to claim this credit; you will not be refunded if your credit would otherwise exceed your tax).

Which students may qualify for a Lifetime Learning Tax Credit?

Students who:

are college juniors, seniors, graduate, and professional degree students, including adults returning to college;

are enrolled in at least one course leading to a degree, certificate, or improved job skills;

made "out of pocket payments during the tax year for qualified tuition and related expenses" (see definition) for periods of enrollment occurring within the tax year or during the first three months of the subsequent tax year.

NOTE: Information about the American Opportunity Tax Credit, which applies to students enrolled in the first two years of post-secondary education, follows below.

Am I eligible to take the Lifetime Learning Tax Credit if I take courses in a non-degree program?

Amounts that students pay for tuition and related fees may qualify for the Lifetime Learning Tax Credit even if the course is part of a non-degree program. However, the course(s) must be taken by the student to acquire or improve job skills.

What are the "Out of Pocket Payments for Qualified Tuition and Related Expenses"?

"Out of Pocket Payments for Qualified Tuition and Related Expenses" are payments made to a college for fees and tuition (including the costs of books, supplies and equipment needed for a course of study) and other academically related activities (not including gym, student government, health or student activities fees), minus any "untaxed educational benefit" (e.g., most grants, scholarships, fellowships, and fee waivers) or any refunds that you have received.

It is important to note that the new law requires all nontaxable scholarships and grants to be deducted from the qualified tuition and expenses paid, before a tax payer may claim an American Opportunity Tax Credit or Lifetime Learning tax credit.

Who can claim a Lifetime Learning Tax Credit?

Taxpayers who:

are students not claimed as dependent on anyone else's tax return, or non-students entitled to claim an eligible student as either a spouse or as a tax dependent for whom you claim an exemption;

do not have an adjusted gross income greater than $ 61,000 for single filers or $ 122,000 for couples filing jointly; and

have not already claimed more than a total of $2,000 for the Lifetime Learning tax credit in the same tax year.

What is an American Opportunity Tax Credit?

The American Tax Opportunity Credit is actually a federal Income tax credit that is similar to the Lifetime Learning Tax Credit described above except that it is: equivalent to 100% of the first $2,000 of out of "Out of Pocket Payments for Qualified Tuition and Related Expenses" and 25% of the second $ 2,000, for a maximum of $2,500 per eligible student.

Additionally, if the refundable portion of your credit is more than your tax, the excess (up to 40% of the credit and limited to $1,000 per student) will be refunded to you.

You can only claim the American Opportunity Tax Credit for the same student's expenses for up to a maximum of 4 tax years.

Which students may qualify for an American Opportunity Tax Credit?

Students who meet the standards for a Lifetime Learning tax credit and in addition:

have not yet completed the first 4 years of postsecondary education before the beginning of the tax year;

have not claimed a Hope credit or the American opportunity credit in 4 other tax years;

are enrolled at least half-time during at least one quarter in the tax year; and

are enrolled in a course of study leading to a degree or a recognized certificate.

Who can claim an American Opportunity Tax Credit?

Taxpayers who:

are students not claimed as dependent on anyone else's tax return, or non-students entitled to claim an eligible student as either a spouse or as a tax dependent for whom you claim an exemption;

do not have an adjusted gross income greater than $ 90,000 for single filers or $ 180,000 for couples filing jointly;

have not already claimed more than a total of $2,500 per student for the tax credit in the same tax year; and

are not claiming the Lifetime Learning Tax Credit for the same student in the same tax year.

An American Opportunity Tax Credit is available to each qualifying student, even if there is more than one in the taxpayer's family during the same tax year.

Can I claim both a Lifetime Learning Tax Credit and an American Opportunity Tax Credit in one tax year?

Taxpayers cannot claim both an American Opportunity Tax Credit and a Lifetime Learning tax credit for the same student in the same tax year; you can choose to claim either credit, but not both. However, the two credits can be claimed simultaneously for different qualifying students in the same tax year. For example, in a family where two children are in college simultaneously, one student may qualify for the American Opportunity Tax Credit while the other may qualify for the Lifetime Learning tax credit. In such a case, the parents (taxpayers) may claim both an American Opportunity Tax Credit and a Lifetime Learning tax credit on their tax form.

What about payments made with student loans?

Payments paid with proceeds from student loans are considered the same as cash payments and will count as "out of pocket" payments for qualified tuition and related expenses. If you paid for a portion of your qualified expenses using scholarships or grants, those are not considered "out of pocket" payments.

If the information supplied by Stony Brook University indicated that I paid a certain amount in tuition and fees, does that mean I can claim that amount for a tax credit?

Not necessarily. It is very important that taxpayers first obtain advice from a qualified tax advisor. There may be some circumstances that could affect an individual's eligibility to claim an educational tax credit, such as:

the student may have received nontaxable grants or scholarships of which the university has no knowledge;

the taxpayer may be required to pay an alternative minimum tax; or

other special circumstances that could make the taxpayer ineligible (e.g., we will not know if the student/taxpayer earns too little or too much to be eligible, may not know of a relevant felony drug conviction, may not know if the student has already completed the first 4 years of postsecondary education, or if the student attended other eligible institutions).

Where can I access my payment information?

Your personal statement of payments is available through the SOLAR system, under Campus Financial Services > Account Information/Payment > Account Summary/What Do I Owe. The statement may be printed as a PDF document from the What Do I Owe page. SOLAR kiosks are available in the Student Services Lobby in the Administration Building.

Do I have to do anything now?

You must keep the university's Registrar's Office informed of your correct name, social security number and address for tax reporting purposes. If you move or change your name between now and next February, you must keep the school informed of your new name or address.